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Federal Reserve Bank of St. Louis
Working Papers
Population growth and asset prices
Peter S. Yoo

This paper explores the theoretical relationship between the population growth rate and asset prices implied by an overlapping-generations model. The model shows that changes in a population's age distribution affect asset prices but such changes generate low frequency movements in asset prices. The model also shows that the treatment of expectations matter; a small response of individuals to changes in asset prices has large implications for the path of asset prices. Finally, the model shows that incorporating a supply of assets by interpreting an asset as a claim on physical capital diminishes the magnitude of the relationship but does not change the sign or timing of the relationship between a population's age distribution and asset prices.

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Peter S. Yoo, Population growth and asset prices, Federal Reserve Bank of St. Louis, Working Papers 1997-016, 1997.
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Keywords: Demography ; Population ; Prices
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